Forex currencies have been dormant since the beginning of August as Markets haven’t found what they want in the latest key data reports.
As previously thought, the latest NFP, PPI, and CPI combo reports would have expected to relieve volatility in FX. But volatility there wasn’t.
After receiving all the most influential market data, the next step will be next Wednesday’s FOMC rate decision (September 17).
Prior to the CPI release, expectations for a 50 bps cut were priced at 10% and are now closer to 5%. The 25 bps cut, however, is still priced to be a sure thing.
Indeed, when looking at Market reactions in other assets, it seems that the theme that is developing is one of a less prolonged impact of tariffs.
Despite an as expected 0.3% report, participants bidding on Bonds and Gold point toward a repricing of lower long-run inflationary impact of tariffs (while they are just starting to bite now), which is flattening the US Yield curve.
Until now, pricing has been one of lower short-term inflation expectations versus higher ones in the long run.
Despite the immediate US Dollar selloff, FX currencies are hesitant and hang close to unchanged on the session.
Discover major currency pairs charts and levels, after first peaking at reactions to other asset classes.
